Loading...
(A) Every person or business engaged in any trade, occupation or profession, or other activity or anyone required to file a return under this chapter in the city shall be required to complete and execute the questionnaire prescribed by the occupational tax office. Each person shall be required to complete a separate questionnaire for each separate business before the commencement of business or in the event of a status change, other than change of address. Licensees are required to notify the occupational tax office of changes of address, or the cessation of business activity, and of other changes which render inaccurate the information supplied in the completed questionnaire.
(B) Every natural person and every entity defined in § 111.01 above engaging in any activity for profit, or filing Kentucky Income Tax forms 740, 741, 765, 720 or 720S, shall be required to file and pay to the Occupational Tax Administrator an annual occupational license fee resulting from engaging in each activity. The license fee shall be measured by 1% of compensation defined in § 111.01 above and 1% of the net profits defined in § 111.01 for each separate business or entity.
(1) Each person, business and entity above operating for profit entirely within the city shall attach a copy of their appropriate Kentucky Income Tax Return (form 720 or 720S along with 720L, 740, 741 or 765) and supporting schedules (e.g., Federal Schedule C, E or F.).
(2) All partnerships and LLCs (not their partners or members) and S corporations (not their shareholders) are subject to this chapter, that is, the occupational license fee is not "passed through" these entities. In the case of guaranteed payments to partners, the partners are subject to the occupational license fee on any like payments. The partnership will be subject to the occupational license fee on any income shown on Schedule K, page 3, of Kentucky Form 765, less the guaranteed payments.
(C) Subject to this chapter is all income derived from the hire, rental or leasing of personal property, including those persons engaged in farm activity. All wages, salaries, commissions or other income earned or received by persons, associations, partnerships, corporations, S corporations, joint ventures or any renting or leasing real estate if the person, association, partnership, corporation, joint venture or other entity owns any interest in real estate in the city used for commercial or industrial purposes.
(D) Persons, associations, partnerships, corporations, joint ventures or any other entity will be subject to the occupational license fee on any income shown on Federal Schedule E.
(E) Every person or business engaged in farm activity for profit will be subject to the occupational license fee on any net income shown on Federal Schedule F.
(F) Sole proprietors engaged in any business activity for profit will be subject to the occupational license fee on any income shown on Federal Schedule C.
(G) Wages earned either within or outside the city may not be used as a credit against the net profits of a business
(H) A person practicing a business, profession, trade or occupation shall be deemed to be subject to the net profits licenses fee if the person has a nexus with the city sufficient to justify the imposition of the license fee in a manner consistent with the commerce clause and the due process clause of the Fourteenth Amendment to the Constitution of the United States and other applicable federal law. If the person has a sufficient nexus with the city, but also has a sufficient nexus with other cities or counties of the state, other states of the United States, and/or other nations, then the net profits derived from activities conducted within the city shall be determined by the apportionment formula set out in § 111.04 below herein (or other applicable section). It shall not be necessary that there be an independently established nexus between the city and each activity from which the licensee has derived income subject to apportionment. Consequently, the "net profit" of the corporation, fiduciary, partnership or other association shall be subject to apportionment and taxation based on unitary business principles. To the extent that the licensee submits satisfactory proof that any income is not from a unitary source, such income may be excluded.
(I) Establishing "nexus": without excluding by implication other activities which may create a nexus, one or more of the following connections between a person/business entity in the city shall normally establish a sufficient nexus:
(1) Location of a place of business in the city;
(2) Frequent and continuing entry into the city in the course of business by an officer or employee of a business;
(3) Delivery of goods to residents in the city other than through the mails or by common carrier;
(4) Contracting to buy or sell goods in the city; and
(5) Contracting substantial business activity in the city leading to a contract to sell goods.
(J) Paid preparer certification in lieu of filing of return:
(1) Upon the certification of the taxpayer and the certification of a "paid tax preparer", provided on a form approved by the Occupational Tax Administrator, that the net profit or other income of an employee, taxpayer or other entity shown upon the approved form is and has been calculated by the paid tax preparer certifying the form based on actual filed tax returns which are and shall remain for the applicable federal statute of limitation on file in the preparer's office;
(2) The filing shall be deemed consent by the taxpayer and preparer for the Administrator to review the forms on file at any time deemed necessary by the Administrator;
(3) Upon filing § 1.03 shall be deemed to have been complied with without the necessity of deposit of a copy of the returns or forms with the Administrator; and
(4) Notwithstanding the above the paid preparer and taxpayer shall make the return or forms available to the Administrator immediately upon written request from the Administrator.
(Ord. 09-03, passed 6-13-2009)
(A) Generally.
(1) Occupational license fee is required generally as set forth in § 111.02 above.
(2) All partnerships, S corporations, and all other entities where income is "passed through" to the owners are subject to this chapter. The occupational license tax imposed in this chapter is assessed against income before it is "passed through" these entities to the owners.
(3) If any business entity dissolves, ceases to operate or withdraws from the city during any taxable year, or if any business entity in any manner surrenders or loses its charter during any taxable year, the dissolution, cessation of business, withdrawal or loss or surrender of charter shall not defeat the filing of returns and the assessment and collection of any occupational license tax for the period of that taxable year during which the business entity had business activity in the city.
(4) If a business entity makes, or is required to make, a federal income tax return, the occupational license tax shall be computed for the purposes of this chapter on the basis of the same calendar or fiscal year required by the federal government, and shall employ the same methods of accounting required for federal income tax purposes.
(B) Exemptions.
(1) The occupational license tax imposed in this section shall not apply to the following persons or business entities:
(a) Any bank, trust company, combined bank and trust company, combined trust, banking and title business organized and doing business in this state, any savings and loan association whether state or federally chartered;
(b) Any compensation received by members of the State National Guard for active duty training, unit training assemblies and annual field training;
(c) Any compensation received by precinct workers for election training or work at election booths in state, city and local primary, regular or special elections;
(d) Public service corporations that pay an ad valorem tax on property valued and assessed by the State Department of Revenue pursuant to the provisions of KRS 136.120. Licensees whose businesses are predominantly non-public service who are also engaged in public service activity are required to pay a license fee on their net profit derived from the non-public service activities apportioned to the city;
(e) Persons or business entities that have been issued a license under KRS Chapter 243 to engage in manufacturing or trafficking in alcoholic beverages. Persons engaged in the business of manufacturing or trafficking in alcoholic beverages are required to file a return, but may exclude the portion of their net profits derived from the manufacturing or trafficking in alcoholic beverages;
(f) Insurance companies incorporated under the laws of and doing business in the Commonwealth of Kentucky except as provided in KRS 91 A.080; and
(g) Any profits, earnings, distributions of an investment fund which would qualify under KRS 154.20-250 to 154.20-284 to the extent any profits, earnings or distributions would not be taxable to an individual investor.
(2) All natural persons aged 65 and older shall be exempt from the provisions of the occupational license fee as to the first $2,000 of salaries, wages, commissions or other compensation earned by those persons in the city for work done or services performed or rendered in the city, or exempt as to the first $2,000 of net profits of any business, trade occupation or profession conducted in the city. It shall be the duty of all employers to withhold on all wages. Each individual person entitled to this refund must file FORM-ERC65 provided by or obtainable from the occupational tax office. A W-2 and proof of age must be provided to receive the refund. No more than one exemption will be allowed per person or business. This exemption may be used on either personal wages or net profits.
(3) A person engaged in agriculture business (raising crops and livestock) who employs less than five employees on a regular time basis, (450 hours during a quarter), may file a return and pay the withholding tax at the end of the taxable year.
(4) Compensation received for domestic services rendered by those persons classified as domestic servants by § 111.01 above.
(5) Those persons qualifying under KRS 68.197(2).
(Ord. 09-03, passed 6-13-2009)
(A) Except as provided in division (D) below, net profit shall be apportioned as follows:
(1) For business entities with both payroll and sales revenue in more than one tax district, by multiplying the net profit by a fraction, the numerator of which is the payroll factor, described in division (B) below, plus the sales factor, described in division (C) below, and the denominator of which is two;
(2) For business entities with sales revenue in more than one tax district, by multiplying the net profit by the sales factor as set forth in division (C) below; and
(3) For the purposes of divisions (A) through (D) of this section, the business entity shall file an apportionment form provided by the occupational tax office.
(B) The payroll factor is a fraction, the numerator of which is the total amount paid or payable in the city during the tax period by the business entity for compensation, and the denominator of which is the total compensation paid or payable by the business entity everywhere during the tax period. Compensation is paid or payable in the city based on the time the individual's service is performed within the city.
(C) The sales factor is a fraction, the numerator of which is the total sales revenue of the business entity in the city during the tax period, and the denominator of which is the total sales revenue of the business entity everywhere during the tax period.
(1) The sales, lease or rental of tangible personal property is in the city if:
(a) The property is delivered or shipped to a purchaser, other than the United States government, or to the designee of the purchaser within the city regardless of the f.o.b. point or other conditions of the sale; or
(b) The property is shipped from an office, store, warehouse, factory or other place of storage in the city and the purchaser is the United States government.
(2) Sales revenues, other than revenue from the sale, lease or rental of tangible personal property or the lease or rental of real property, are apportioned to the city based upon a fraction, the numerator of which is the time spent in performing the income-producing activity within the city and the denominator of which is the total time spent performing that income-producing activity.
(3) Sales revenue from the sale, lease or rental of real property is allocated to the tax district where the property is located.
(D) If the apportionment provisions of this section do not fairly represent the extent of the business entity's activity in the city, the business entity may petition the city or the city may require, in respect to all or any part of the business entity's business activity, if reasonable:
(1) Separate accounting;
(2) The exclusion of any one or more of the factors;
(3) The inclusion of one or more additional factors which will fairly represent the business entity's business activity in the city; or
(4) The employment of any other method to effectuate an equitable allocation and apportionment of net profit.
(E) When compensation is paid or payable for work done or services performed or rendered by an employee, both within and without the city, the license tax shall be measured by that part of the compensation paid or payable as a result of work done or service performed or rendered within the city. The license tax shall be computed by obtaining the percentage which the compensation for work performed or services rendered within the city bears to the total wages and compensation paid or payable. In order for the city to verify the accuracy of a taxpayer's reported percentages under this division (E), the taxpayer shall maintain adequate records.
(Ord. 09-03, passed 6-13-2009)
(A) Every employer making payment of compensation to an employee shall deduct and withhold upon the payment of the compensation any tax imposed against the compensation by the city. Amounts withheld shall be paid to the city in accordance with this chapter.
(B) Every employer required to deduct and withhold tax under this section shall, for the quarter ending after January 1 and for each quarter ending thereafter, on or before the end of the month following the close of each quarter, make a return and report to the city, and pay to the city, the tax required to be withheld under this section, unless the employer is permitted or required to report within a reasonable time after some other period as determined by the city.
(C) Every employer who fails to withhold or pay to the city any sums required by this chapter to be withheld and paid shall be personally and individually liable to the city for any sum or sums withheld or required to be withheld in accordance with the provisions of this section.
(D) The city shall have a lien upon all the property of any employer who fails to withhold or pay over to the city sums required to be withheld under this section. If the employer withholds, but fails to pay the amounts withheld to the city, the lien shall commence as of the date the amounts withheld were required to be paid to the city. If the employer fails to withhold, the lien shall commence at the time the liability of the employer is assessed by the city.
(E) Every employer required to deduct and withhold tax under this section shall annually on or before February 28 of each year complete and file on a form furnished or approved by the city a reconciliation of the occupational license tax withheld where compensation is paid or payable to employees. Either copies of federal forms W-2 and W-3, transmittal of wage and tax statements, or a detailed employee listing with the required equivalent information, as determined by the city, shall be submitted.
(F) Every employer shall furnish each employee a statement on or before January 31 of each year showing the amount of compensation and occupational license tax deducted by the employer from the compensation paid to the employee for payment to the city during the preceding calendar year.
(G) An employer shall be liable for the payment of the tax required to be deducted and withheld under this section.
(H) The President, Vice President, Secretary, Treasurer or any other person holding an equivalent corporate office of any business entity subject to this chapter shall be personally and individually liable, both jointly and severally, for any tax required to be withheld from compensation paid to one or more employees of any business entity, and neither the corporate dissolution or withdrawal of the business entity from the city, nor the cessation of holding any corporate office, shall discharge that liability of any person; provided that the personal and individual liability shall apply to each or every person holding the corporate office at the time the tax becomes or became obligated. No person shall be personally and individually liable under this division who had no authority to collect, truthfully account for, or pay over any tax imposed by this chapter at the time that the taxes imposed by this chapter become or became due.
(I) Every employee receiving compensation in the city subject to the tax imposed under this chapter shall be personally liable for the tax notwithstanding the provisions of this section. In all cases where the employer does not withhold the tax levied under this chapter from the employee, the employee or employees shall be responsible for filing with the city each quarter in the same manner as if they were the employer. If an employer fails to or is not required to withhold, report or pay the license fee it shall become the duty of the employee to file with the city. The only employer that is not required to withhold, report and pay the occupational license tax is the federal government, including the United States Postal Service. The payment required to be made by an employee, can be made quarterly, for the periods ending March 31, June 30, September 30 and December 31 of each year, or at any time the employee wishes to make an estimated payment for the year in which wages are earned. All license fees must be received by February 28 for the preceding calendar year, together with a copy of the employee's W-2 form. Employers not required to withhold, report, or pay the license fee must annually during the month of January of each year, make a return to the Occupational Tax Administrator, in which is set forth the name and social security number of each employee of the employer during the preceding calendar year, giving the amount of salaries, wages, commissions or other compensation earned during the preceding year by each employee. This list shall include all current full time employees, part time employees, temporary employees and terminated employees whether it be voluntary or involuntary.
(Ord. 09-03, passed 6-13-2009)
(A) All business entity returns for the preceding taxable year shall be made by April 15 of each year, except returns made on the basis of a fiscal year, which shall be made by the fifteenth day of the fourth month following the close of the fiscal year. Blank forms for returns shall be supplied by the city.
(B) Every business entity shall submit a copy of its federal income tax return and all supporting statements and schedules at the time of filing its occupational license tax return with the city. Whenever, in the opinion of the city, it is necessary to examine the federal income tax return of any business entity in order to audit the return, the city may compel the business entity to produce for inspection a copy of any statements and schedules in support thereof that have not been previously filed. The city may also require copies of reports of adjustments made by the federal government.
(C) Every business entity subject to an occupational license tax governed by the provisions of this chapter shall keep records, render under oath statements, make returns and comply with rules as the city from time to time may prescribe. Whenever the city deems it necessary, the city may require a business entity, by notice served to the business entity, to make a return, render statements under oath, or keep records, as the city deems sufficient to determine the tax liability of the business entity.
(D) The city may require, for the purpose of ascertaining the correctness of any return or for the purposes of making an estimate of the taxable income of any business entity, the attendance of a representative of the business entity or of any other person having knowledge in the premises.
(E) The full amount of the unpaid tax payable by any business entity, as appears from the face of the return, shall be paid to the city at the time prescribed for filing the occupational license tax return, determined without regard to any extension of time for filing the return.
(F) It shall be the responsibility of persons who make Federal Form 1099 "non-employee compensation" payments to natural persons other than employees for services performed within the city, to maintain records of the payments and to report the payments to the city. The payments must be reported on by remitting Federal Form 1099 by February 28 of the year following the close of the calendar year in which the non employee compensation was paid. If a business entity or person is not required to remit Federal Form 1099 to the IRS, including but not limited to payments less than $600, they are still liable to remit the equivalent information to the city. The information required to be reported by the licensee shall include:
(1) Payer's name, address, Social Security and/or federal identification number;
(2) Recipient's name and address;
(3) Recipient's Social Security and/or federal identification number;
(4) Amount of non employee compensation paid in the calendar year; and
(5) Amount of non employee compensation earned in the city for the calendar year.
(G) Licenses are permitted to report items on all returns and accompanying schedules in whole dollar amounts. To do so, licensees should drop any amount less than $0.50 and increase any amount from $0.50 to $0.90 to the next highest dollar.
(H) Automatic extension if due date falls on Saturday, Sunday or city holiday: any return required to be filed hereunder shall be considered to have been timely filed if it is postmarked or hand-delivered to the occupational tax office on or before the due date or, in the event the due date is a Saturday, Sunday or legal holiday, if it is postmarked or hand-delivered to the occupational tax office on the next day which is not a Saturday, Sunday or a city legal holiday.
(I) Any request for a refund, or for credit for an overpayment of any occupational license fee paid to the Tax Administrator, unless paid under protest, must be filed within one year from the date of the filing of the completed return, if timely filed.
(1) In a case where the return involved was not timely filed, the request for the refund must be made within one year from the original due date of the return.
(2) For the purpose of this regulation, a return shall be considered as timely filed if it is received at the occupational tax office, or postmarked, by the due date specified in any duly approved extension of time for filing granted upon the request of the licensee.
(Ord. 09-03, passed 6-13-2009)
Loading...